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FAIR Plan president asks Calif. regulator to back off recent order

The head of California's fire insurer of last resort has asked the state regulator to withdraw a rule change mandating that the program offer more comprehensive insurance coverage.

Anneliese Jivan, president of the FAIR Plan, in a letter to the California Department of Insurance, said the association has seen no demand from brokers to include coverage for things like water damage, liability and theft as an add-on to backstop fire insurance, which the recent order requires.

Commissioner Ricardo Lara in late November mandated that the FAIR Plan, which was established for the narrow purpose of providing fire protection to those who cannot get it in the private markets, offer HO-3 coverage. Its rolls have grown since the industry paid out billions in losses from record fire losses in 2017 and 2018, and companies have chosen to drop coverage in areas of high risk.

The FAIR Plan does not have the expertise or infrastructure to include more insurance policies to its coverage, Jivan said in her letter. Brokers in the state are concerned about customers losing multiline discounts when they bundle FAIR Plan policies with other coverage available in the voluntary market, she added.

The association does agree with Lara's move to increase FAIR Plan residential limits to $3.0 million from $1.5 million. The FAIR Plan also supports his order's push toward diverse payment options through credit cards, electronic funds transfer and monthly payments, but said it cannot meet the state's Feb. 1, 2020, deadline.

The association also questioned Lara's requirement that additional payment options be made available at no further cost to consumers. The FAIR Plan should be able to pass charge fees from credit card companies through to consumers who opt to use that payment method just as the state does, Jivan wrote.